Trading Thoughts For The Week Ahead  - Sunday 25th July

This week's guest is chocolat who gives her own thoughts on the issues facing us in today's economic climate. If anyone else would like to be the guest "Thoughter" please let us know by emailing mike@moneyam.com

Monday 26 JulyInterims Pearson At the international publishers AGM in April, chairman Dennis Stevenson warned that the seasonal nature of Pearsons core book-publishing business, would see most profits in the second half. Analysts forecast full year profits of 423 million, rising to 505 million in 2005.Interims Reckitt Benckiser The consumer products group is rumoured to have qualified for the final round of bidding for the over the-counter medicines business of Swiss drugs group Roche. On top of that, Reckitt is also thought to be again mulling over a bid for Durex condoms-to-Scholl sandals group SSL.Tuesday 27 JulyInterims Alliance & Leicester Trading in the first quarter showed solid progress in business volumes and the group remains on target to achieve its primary objective of double-digit percentage growth in its EPS. The wholesale banking side saw volume growth in cash sales and commercial lending balances.Finals Eurodis Electron Eurodis released a cautious trading statement in May, saying that its 39 million raising in March helped the business get back on a normal footing. However, the electronic component distributor has enjoyed a lower market share than anticipated and profitability will take a few months longer than expected.Wednesday 28 JulyEx-dividend Cranswick Despite the untimely acquisition of a sandwich business last year, the food group was still able to increase the dividend by 10% to 13.2p. The sandwiches lost a major contract just after being bought, but the pet, animal and food businesses should continue to stand Cranswick in good stead. Ex-dividend Countryside Properties Mays interims saw a sharp decline in profits, although this was well signposted by an earlier profits warning, and figures could have actually been worse. However, the house builder retains a very strong landbank and the interim dividend was increased from 2.62p to 2.88p.Thursday 29 JulyInterims National Express The groups June pre-close trading statement reported that trading was in line with market expectations. Passenger volumes across the trains division are seeing average growth of 5%, while the coach division had a strong start to the year with an increase in passenger numbers of 6%.Interims Trinity Mirror A fairly confident trading update in June reported healthy increases in advertising and circulation, with the exception of the Daily Mirror. Although volumes have dropped even further since the sacking of Piers Morgan, the offsetting increase in cover prices should boost group circulation revenues.Friday 30 JulyInterims Lloyds TSB These interims are expected to be solid but uninspiring. Retail lending has seen the bank increase its market share in core lending such as mortgages and credit cards, although this is likely to see some erosion in margin levels. Net new mortgage lending in the first quarter was 2.6 billion against 2.2 billion in Q1 2003.Interims Rolls Royce 2004 has seen the aero-engine manufacturer bounce back with a vengeance. It recently secured its first order for the in-development Trent 1000 engine with Air New Zealand, which follows a contract believed to be worth over $120 million with Cathay Pacific that will see the airline take five Trent engines.

Thoughts Ok who the eck is chocolat? You might be able to detect the odd clue, here and there.. And before anyone says anything, nobody can be more surprised than I to find myself attempting to make a sensible contribution to start this thread for the week.Kyoto mentioned that it took him 20 minutes to accept the invitation.It took me 3 weeks, and then I only agreed under threat of extreme punishment and finally, blackmail (that maggiebunton has more dodgy videos stashed in her garage). And then, decisions, decisions. It was suggested that I might enlighten the unenlightened with my Forex methodology, but after only four fun years, I still consider myself a novice. So, instead, I have penned a few thoughts on the subject of money, which constitute the tenet that drives me to believe I stand more chance of making my money work harder for me in this game.Making our money work harder, to all intents and purposes, means making it work twice running two sets of risks in the hope of obtaining two sets of rewards. Lest we forget, this was the sales pitch used to bring new members into Lloyds. It could have been achieved more simply by doubling up on the horses. It is always a temptation and, suitably repackaged, it will find its moment. Once again, the returns on our savings have been looking dismal.Life assurance? Dont even mention those Equitable gentlemen.Shares? Now theres a thing, theyre back to where they were in May 1997.Government stocks and bonds? Here and on Wall Street, yields have fallen to levels scarcely seen for half a century.Pensions? If I start on that, Ill never stop suffice to say, Malcolm Wicks, pensions minister said last week that he was interested in a much more serious and balanced debate, in response to a report into the pensions deficits of the largest 100 listed companies (oh dear, he didnt like the gloomy tone) despite a 13.6% rise in the FTSE 100 index in 2003, the combined deficit in these companies schemes barely improved. A deficit of 60bn is a wake-up call indeed to anyone who still thinks that rising share prices will fill funding holes.So what have we now? The hedge funds claim to be able to make money for us in all seasons, and charge accordingly. We can see the returns from these alternative investments, what we may not yet see is the risk. So what happens when all these alternatives have to be turned into the oldest alternative cash? The BoEs Financial Stability Review concludes that the search for yield poses risks the test will come when the weather changes. And after a long, sunny spell, when money has been cheap and plentiful, and governments everywhere have slipped back into their old ways of borrowing and spending, interest rates are on their way up. Cold winds and cold weather bring on financial fatigue. Our houses seem to have been working hard to make us richer while we were asleep. There is little question that the average household feels enriched by the Labour years, and enriched for one reason: the value of property has gone up, and gone up far faster than general prices. Averaged across the country, houses are now worth 2.4 times what they were when New Labour came to power in May 1997. For most households, the apparent rise in housing wealth has outstripped any losses on the stock market. It has encouraged homeowners to treat their homes as their pensions or to withdraw capital from their homes in order to spend it on other goodies. Many have been tempted to go further and make speculative investments in the property market: ordinary people who would never dare borrow money to invest in the stock market have been persuaded to gear themselves many times over in order to build themselves a portfolio of investment properties. The fact that this massive creation of wealth is illusory is still not commonly recognised. We are mostly still living in the same crummy old houses as we were in 1997. Its not so much that they have risen in value as that money has fallen in value. To put the rise in house prices into another context, the pound in the homebuyers pocket in 1997 is now worth just 41 pence. Rising house prices are as much a kind of inflation as rises in the price of a packet of cornflakes. They do not amount to the creation of wealth, but to the redistribution of wealth to homeowners from non-homeowners. House price inflation distorts the economy, lowers the standard of living for those who failed to buy a home several years ago and, by trapping people with large mortgages, greatly harms the mobility of labour which is essential to a dynamic economy. Worse, there is always the danger that the speculative bubble could burst, leading to misery and ruin on a scale which contributed to the collapse in support for the Major government in the early 1990s. Over the past couple of years the Chancellor has begun positively to encourage house price inflation, where he might previously have been perceived to tolerate it. Most blatantly he has done this by dropping the Retail Prices Index as the official measure of inflation and replacing it with the Index of Consumer Prices.Brown excused the change on the grounds that he needed to bring Britains inflation figures in line with those of the rest of the EU. Yet clearly this is far from the whole story.While the former contained a minimal element of house price inflation, the latter includes no housing costs whatsoever: thus the official cost of living index now excludes the cost of putting a roof over our heads. The effect of this statistical manoeuvre is to compel the Bank of Englands Monetary Policy Committee to ignore house price inflation when it comes to setting interest rates. Whilst the base rate has risen from 3.5 to 4.5 per cent over the past nine months, it would have risen far faster had the MPC been charged with moderating house price inflation, now rising at close to 20 per cent.Manipulation of the inflation figures is far from the only way in which Brown has sought to stoke the housing boom. Over the next three years he has committed himself to pumping 690 million of taxpayers money directly into the housing market, through the so-called Keyworker Living scheme, which is designed to help public sector employees to buy homes in areas where they would otherwise be unable to do so. Teachers, nurses and firemen, for example, can apply to the government for an interest-free loan of up to 50,000 (100,000 in the case of some teachers) to assist them in buying property on the open market. Disgracefully, officials at the Office of the Deputy Prime Minister have added themselves - planners - to the list of essential workers who qualify for the loans. And we have a pay rise on a significant scale which will not show up in the figures for wage inflation. Just when it seemed that the housing market might finally have peaked last year, Brown hit on a further way to encourage it: he announced that as from next year investors will be allowed to shelter residential property investments from tax by holding them within a pension fund. On the same day that the Chancellor made this announcement, he also removed many of the tax advantages of holding shares within an ISA. He thus sought to encourage the flow of money from the stock market into the housing market, at a time when any encouragement ought to be in the other direction. The great party for property investors may finally be at an end - prices are already falling in some areas. That isnt to say that Brown, yet again, wont dream up some wheeze of stimulating the market and pumping up prices for a few months yet.Finally I cant finish without a few bonmots (thanks a bunch, mg!) on matters across the pondThis is a link to what is perceivably an extreme view, (Click here) but it shows what is going round There is a groundswell of feeling in the country that is well expressed by this speech.. (Click here) I was really looking forward to saying today that the US market is approaching 10000 but heyho, it pre-empted me on Friday But it is heading further south the stronger Kerry gets. I feel that tax fears are the underlying issue. If he keeps Greenspan, that would help, but Greenspan doesnt have enough room to lower rates to offset a sizeable tax increase. So Kerry may be good for the US, but not so hot for the economy if he takes liquidity out of the system

Time to run for cover? -----Isnt it great, isnt it grand!! chocolat

All the above comments are purely a personal opinion and no investment advice is intended. Please do your own research